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Respondent has issued statutory notices of deficiency to
Intercoastal for its fiscal years ended June 30, 1983 and 1984.
In those deficiency notices, respondent has disallowed the
deduction of the portions of the "rents" paid to MIT 83 that
represent 15 percent of the compensation fee under the employee
leasing agreement, the management fee expense, and the interest
expense attributable to Machise's accrued late fees.
Other Developments
William Crescenzo, a nephew of Dr. Crescenzo, a petitioner
in docket No. 27614-90, had been hired as the controller of
Machise during 1982. He considered himself an employee of
Machise. He knew, however, that there were companies, which he
called "payrolls", whose name appeared on paychecks. He was
unaware of the existence of Qulart, and of the fact that large
amounts of money were being lent at zero percent interest. He
did not understand the purpose of checks coming in and going back
to the maker, but at Bucci's direction, he followed written
instruction from BBPA.
Frank Peretti succeeded Ingemi as Machise's operations
manager after Ingemi's death and later became the company
controller. Peretti understood that the various partnerships
were his employers, because "every year our payroll company
changed." Ingemi had explained to Peretti that the details were
complicated, and that Ingemi did not fully understand them
himself, but to trust him and "you still have a job." Among
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